Accounting Mcqs - Set 16

1)   Closing stock appearing in the Trial Balance is shown in:

a. Trading A/c and Balance Sheet
b. Profit and Loss A/c
c. Balance Sheet only
d. Trading A/c only
Answer  Explanation 

ANSWER: Balance Sheet only

Explanation:
No explanation is available for this question!

2)   Depreciation Account appearing in the Trial Balance is shown in:

a. Profit and Loss A/c
b. Trading A/c
c. Deducted from the concerned assets A/c
d. Shown on the liability side
Answer  Explanation 

ANSWER: Profit and Loss A/c

Explanation:
No explanation is available for this question!

3)   Profit on sale of old plant is:___________?

a. In Trading A/c
b. In Profit and Loss Appropriation A/c
c. Profit and Loss A/c
d. Being a non operating item ignored
Answer  Explanation 

ANSWER: Profit and Loss A/c

Explanation:
No explanation is available for this question!

4)   Carriage on goods purchased is shown in:___________?

a. Profit and Loss A/c
b. Capitalized with work in progress
c. Trading A/c
d. Shown in Balance Sheet
Answer  Explanation 

ANSWER: Trading A/c

Explanation:
No explanation is available for this question!

5)   Which of these is not an operating income?

a. Income from sale of trading goods
b. Bad debts recovered
c. Interest on FDs
d. None
Answer  Explanation 

ANSWER: Interest on FDs

Explanation:
No explanation is available for this question!

6)   Riaz holds an average inventory of 36,000(CP) with an inventory turnover of 5 times. If the firm makes a gross profit of 25% on sales, find the total sales of the company.

a. 2,40,000
b. 2,10,000
c. 2,00,000
d. 1,80,000
Answer  Explanation 

ANSWER: 2,40,000

Explanation:
No explanation is available for this question!

7)   From the following details what will be the partners commission? Net profit before charging partners commission 65,000. Partners commission @ 11% after charging such commission.

a. 6441
b. 5431
c. 7654
d. 9876
Answer  Explanation 

ANSWER: 6441

Explanation:
No explanation is available for this question!

8)   From the following details what will be the partners commission? Net profit before charging partners commission 65,000. Partners commission 11% before charging such commission

a. 6441
b. 5431
c. 7150
d. 5876
Answer  Explanation 

ANSWER: 7150

Explanation:
No explanation is available for this question!

9)   Arrangement of Balance Sheet in a logical order is known as __________?

a. Dressing Balance Sheet
b. Marshalling Balance Sheet
c. Formatting Balance Sheet
d. Make up of Balance Sheet
Answer  Explanation 

ANSWER: Marshalling Balance Sheet

Explanation:
No explanation is available for this question!

10)   Find the value of opening stock from the following data. Purchases 1,50,000, Closing stock 30,000 Sales 2,20,000, Gross profit 40,000.

a. 50,000
b. 55,000
c. 60,000
d. 65,000
Answer  Explanation 

ANSWER: 60,000

Explanation:
No explanation is available for this question!

11)   A Bill of Exchange is drawn on 1st April, 2018 payable after 3 months. The due date of the bill is?

a. 30th June,2018
b. 1st July,2018
c. 4th July,2018
d. 4th August,2018
Answer  Explanation 

ANSWER: 4th July,2018

Explanation:
Bill drawn on 1st April, 2018 payable after 3 months. The due date is 1st April, 2018 + 3 months + 3 days of grace = 4th July, 2018

12)   When bill discounted with the bank is dishonored?

a. Acceptor‘s Account is debited in the books of drawer
b. Bills Receivable Account is credited in the books of drawer
c. Bank Account is debited in the books of drawer
d. Bills Payable Account is debited in the books of drawer
Answer  Explanation 

ANSWER: Acceptor‘s Account is debited in the books of drawer

Explanation:
When a bill discounted with bank has been dishonoured, the drawer debits the Acceptors Account (restores the acceptor status a debtor for the amount due) and credits the Bank Account or Cash Account (the amount he pays to bank). The acceptor debits the Bills Payable Account, the noting charges and credits the Drawer‘s Account (Restores the status quo of the creditor to whom he is due to pay). Hence option A. is correct. All other options are incorrect.

13)   In the books of the drawer, the accounting treatment involved on receipt of a bill of exchange duly accepted by the drawee is?
i. Debit Bills Receivable Account
ii. Debit Drawee‘s Account
iii. Credit Drawee‘s Account
iv. Credit Sales Account

a. Only (i) above
b. Both (ii) and (iv) above
c. Both (i) and (iii) above
d. Both (i) and (iv) above
Answer  Explanation 

ANSWER: Both (i) and (iii) above

Explanation:
In the books of the drawer, the accounting treatment involved on receipt of a bill of
exchange duly accepted by the drawee is debit Bills Receivable Account and credit Drawee‘s Account .i.e., the combination of statements in (i) and (iii) alternative C. is the correct answer. The other alternatives are incorrect because the combination of one correct answer with the statement of incorrect answer. Drawee‘s Account is debited (ii) as soon as a sale is made or any advances is made and Drawee‘s Account is not debited when the bill of exchange is accepted and sales is credited (iv) when the sale is made and not at the time of acceptance of bill of exchange. Thus, the alternatives A., statement (i) B., combination of (ii) and (iv) D. combination of (i) and (iv) are incorrect.

14)   The noting charges levied on dishonour of an endorsed bill by the Notary Public are to be borne by

a. The drawer of the bill
b. The person responsible for dishonour
c. The holder of the bill
d. The endorser of the bill
Answer  Explanation 

ANSWER: The person responsible for dishonour

Explanation:
The noting charges are the charges paid to Notary Public for presenting a bill for
payment and to note the fact of dishonour. The charges are to be borne by the person responsible
for dishonour who is none other than the drawee. Thus, the correct answer is B..

The drawer of the bill A. is incorrect answer because the drawer may pay the charges initially but ultimately they are to be borne by the drawee.
The holder of the C. is entitled to receive the payment of the bill and to bear the noting charges on the bill. The endorser D. may be the drawer of the bill in which case he will recover the noting charges from the drawee of the bill. Thus B. is the correct answer.

15)   The drawer of a trade bill passes relevant entries with regard to the transaction involved in it. But, in case of an accommodation bill, he passes an entry in addition to the usual entries. The additional entry so passed is with respect to

a. Discounting of the bill with the bank
b. Payment of the bill on due date
c. Remitting or receiving the amount
d. Sending the bill to bank for collection
Answer  Explanation 

ANSWER: Remitting or receiving the amount

Explanation:
In case of accommodation bills, the additional entry that is to be passed other than the
usual entries passed with regard to trade bills in the books of the drawer is in respect of (c )
remitting or receiving the amount at the time of discounting the bill and honouring the bill at
maturity. The entries passed are the same in case of discounting the bill with the bank A. and no
additional entry is passed except for sending the share of proceeds to the drawee. On payment of
the bill on due date B. no additional entry is passed in the books of the drawer. If the bill is sent to the bank for collection, D. the purpose behind the accommodation bill is defeated. However, no additional entry is required to be passed at the time of sending the bill to the bank for collection D.. Thus, C. is the correct answer.

16)   Under which of the following situations, is journal entry not passed in the books of the drawer?

a. When a discounted bill is honoured by the drawee on the due date
b. When a bill is sent to the bank for collection
c. When a bill is renewed at the request of the drawee
d. When a debtor accepts a bill drawn by the drawer
Answer  Explanation 

ANSWER: When a discounted bill is honoured by the drawee on the due date

Explanation:
When a discounted bill is honoured by the drawee on the due date, A. no journal entry
is passed in the books of the drawer. The entry is passed at the time of discounting of the bill itself and no entry is required if the discounted bill is honoured on due date. Hence, A. is the correct answer. The other alternatives are incorrect because, when a bill is sent to the bank for collection B. a journal entry debiting bills sent to bank for collection and crediting Bills Receivable is passed. When a bill is renewed at the request of the drawee C. a journal entry is passed canceling the old bill and raising a new bill with interest. When a debtor accepts a bill drawn by the drawer D. when a debtor is converted to bills receivable and debtors balance is reduced and Bills Receivable account is increased to extent of the amount passing a journal entry to that effect. Thus, A. is the correct answer

17)   Which of the following is not a feature of a promissory note?

a. It must be in writing
b. It contains an unconditional promise to pay
c. It is payable to the bearer
d. It must be signed by the maker
Answer  Explanation 

ANSWER: It is payable to the bearer

Explanation:
According to the Negotiable Instrument Act, promissory note is not payable to the bearer. It must contain an order to pay. So this is not the characteristic of promissory note. Other options are the characteristics of promissory note.

18)   How many parties are generally found in a Bill of Exchange?

a. 4
b. 2
c. 3
d. 5
Answer  Explanation 

ANSWER: 3

Explanation:
No explanation is available for this question!

19)   Negotiable Instrument Act was enacted in_________?

a. 1981
b. 1881
c. 1871
d. 2001
Answer  Explanation 

ANSWER: 1881

Explanation:
No explanation is available for this question!

20)   Which of these is not an essential feature of a bill of exchange?

a. Unconditional
b. Certainty of amount
c. In writing
d. Amount to be paid in foreign currency
Answer  Explanation 

ANSWER: Amount to be paid in foreign currency

Explanation:
No explanation is available for this question!

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